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FIDUCIARY OWNERSHIP AND TRUSTS IN A COMPARATIVE PERSPECTIVE

Published online by Cambridge University Press:  14 October 2014

Daniel Clarry
Daniel Clarry*
Affiliation:
Gonville and Caius College, University of Cambridge, dcc45@cam.ac.uk.
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Abstract

Ownership is an essential feature of trusts that serves as a useful analytical and comparative tool in order to cross legal traditions and compare different legal institutions, which to a greater or lesser extent serve similar socio-economic and legal functions. The concentration on ownership enables one to burrow down into the normative roots of different legal traditions. This article comprises three substantive parts: first, characterizing ownership and the manner in which this concept distinguishes the civil and common law traditions; second, contextualizing ownership in relation to trusts from different legal systems; and, third, conceptualizing some contemporary challenges arising out of the divergent nature of ownership in the phenomenology of the trust paradigm, the value of the trust to comparative law and its effect on the civil law as a distinct tradition. It is argued that trusts necessarily involve the fiduciary administration of property and that ‘fiduciary ownership’ is a better shorthand description of the encumbered nature of trust property, rather than ‘dual’ or ‘split’ ownership, which is misleading and mistaken.

Keywords

comparative lawfiduciary ownershipinternational private lawpropertytrusts
Type
Articles
Information
International & Comparative Law Quarterly , Volume 63 , Issue 4 , October 2014 , pp. 901 - 933
Copyright
Copyright © British Institute of International and Comparative Law 2014 

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57 Trusts (Scotland) Act 1921 (UK) 12 Geo 5, c 58.

58 Trusts (Scotland) Act 1921, section 2.

59 Trusts (Scotland) Act 1921, section 20.

60 Inland Revenue v Clarke's Trs (1939) SC 11, 22 per Lord President Normand; Sharp v Thomson (1995) SC 455, 475 per Lord President Hope (reversed on a different point: (1997) SC(HL) 66); Reid (n 52) 22.

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71 Law No 24, 441 (Argentina, adopted 22 December 1994; enacted 9 January 1995) arts 1, 13 (translated by Marcos Zunino).

72 Ibid, art 73; Argentina Civil Code, art 2662 (translated by Marcos Zunino).

73 Colombian Commercial Code, art 1244 (translated by Juan Pinto).

74 Republic of Panama, Law No 1 of January 5, 1984 (Panama Trust Law) art 1; Executive Decree No 16 of October 3, 1984 (Panama) art 2a.

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96 Louisiana Civil Code, arts 1931 and 1989.

97 Louisiana Civil Code, arts 1981 to 1986.

98 Louisiana Civil Code, arts 1982 and 1983.

99 Louisiana Civil Code, arts 2091, 2094 and 2069, respectively.

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104 Chinese Trust Law (n 102) art 2.

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106 Ibid.

107 Chinese Trust Law (n 102) art 16.

108 Chinese Trust Law (n 102) art 33 (emphasis added).

109 Compare Lee (n 101) 661–3; L Ho, ‘Trust Laws in China: history, ambiguity and beneficiary's rights’ in Smith, Re-imagining the Trust (n 3) 183, 184–85, 192–217; R Lee, ‘Convergence and Divergence in the Worlds of the Trust: Duties and Liabilities under the Chinese Trust’ in Smith, The Worlds of the Trust (n 3) 406, 408–10; Ho, L, ‘The Reception of the Trust in Asia: Emerging Asian Principles of Trust?’ [2004] SingJLS 287, 293–6Google Scholar.

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112 Code civil du Québec/Quebec Civil Code, art 1261.

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114 Smith (n 110) 336.

115 Smith (n 110) 336–7; DWM Waters, ‘The Institution of the Trust in Civil and Common Law’ (1995) 252 Rec des Cours 113, 449.

116 Hayton, Kortmann and Verhagen (n 88) 4.

117 Quebec Civil Code, art 1266.

118 Quebec Civil Code, art 1278.

119 Quebec Civil Code, art 1261.

120 Cantin Cumyn (n 111) 76, 78, respectively. See also M Cantin Cumyn, ‘Reflections regarding the diversity of ways in which the trust has been received or adapted in civil law countries’ in Smith, Re-imagining the Trust (n 3) 20–2.

121 Royal Trust Co v Tucker [1982] 1 SCR 250, 264–273 (SCC).

122 Waters (n 48) 875; Pasquel, RM, ‘The Mexican Fideicomiso: The Reception, Evolution and Present Status of the Common Law Trust in a Civil Law Country’ (1969) 8 ColumJTransnatlL 54, 62–75Google Scholar.

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124 cf Quebec Civil Code, art 947 (‘Ownership may be in various modes and dismemberments.’); Y Emerich, ‘The Civil Law Trust: A Modality of Ownership or An Interlude in Ownership?’ in Smith, The Worlds of the Trust (n 3) 21.

125 Convention on the Law Applicable to Trusts and on their Recognition (1985) (Hague Trusts Convention).

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131 Hague Trusts Convention (n 125) arts 13, 15, 16, 18.

132 Hague Trusts Convention (n 125) art 13.

133 Swiss Private International Law Act (1987) art 149c; L Smith, ‘Stateless Trusts’ in Smith, The Worlds of the Trust (n 3) 93.

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136 Hague Trusts Convention (n 125) art 18.

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138 R Wibier, ‘Can a Modern Legal System Do without the Trust?’ in Smith, The Worlds of the Trust (n 3) 67.

139 Ibid–70.

140 ibid.

141 Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676, 684 (CA).

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149 Hayton, Kortmann and Verhagen (n 88) 13 (emphasis added).

150 Hayton, Kortmann and Verhagen (n 88) 38–39, 43, respectively.

151 von Bar, C and Clive, E (eds), Principles, Definitions and Model Rules of European Private Law: Draft Common Frame of Reference (DCFR) (2009) vol 6, 5691Google Scholar (emphasis added).

152 Clarry, ‘The Worlds of the Trust’ (n 3) 145–6. Compare A Braun, ‘Trusts in the Draft Common Frame of Reference: The “Best Solution” For Europe?’ (2011) 70 CLJ 327; Braun (n 134) 277.

153 cf Contracts (Rights of Third Parties) Act 1999 (UK).

154 cf S Grundmann, ‘Trust and Treuhand in the 20th Century’ in Helmholz, R and Zimmermann, R (eds), Itinera Fiduciae: Trust and Treuhand in Historical Perspective (Duncker & Humblot 1998) 469–93Google Scholar.

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158 Loi du 27 juillet 2003, quoted and cited in Matthews (n 157) 18.

159 Romanian Civil Code, arts 773–91.

160 Hayton, Kortmann and Verhagen (n 88) 196–8.

161 Waters (n 48) 875.

162 See eg Grundmann (n 154); Würdinger, H, ‘The German Trust’ (1951) 33 JCompLeg 31Google Scholar; Grundmann, S, ‘Trust and Treuhand at the End of the 20th Century’ (1999) 47 AmJCompL 401Google Scholar.

163 F Barrière, ‘The Security Fiducie in French Law’ in Smith, The Worlds of the Trust (n 3) 101, 103–8, 119–23, 140. See also F Barrière, ‘The French fiducie, or the Chaotic Awakening of a Sleeping Beauty’ in Smith, Re-imagining the Trust (n 3) 222; B Mallet-Bricout, ‘The Trustee: Mainspring, Or Only a Cog, in the French fiducie?’ in Smith, The Worlds of the Trust (n 3) 141.

164 cf Hayton, DJ, Matthews, P and Mitchell, C, Underhill and Hayton: Law Relating to Trusts and Trustees (18th edn, LexisNexis 2010) 2Google Scholar.

165 Uniform Statutory Trust Entity Act 2009, Prefatory Note.

166 Uniform Statutory Trust Entity Act 2009, section 307 (Comment) (emphasis added).

167 cf Hansmann, H & Kraakman, R, ‘The Essential Role of Organizational Law’ (2000) 110 YaleLJ 387, 390–8Google Scholar, 405–6, 416–17; Sitkoff, R, ‘An Agency Costs Theory of Trust Law’ (2004) 89 CornellLRev 621, 631–3Google Scholar, 641–3.

168 Maitland, FW, ‘The Unincorporate Body’ and ‘Trust and Corporation’ in , Fisher (ed), The Collected Papers of Fredrick William Maitland (Cambridge 1911) 271–84Google Scholar and 321–404, respectively (emphasis added).

169 See Smith, L, ‘Mistaking the Trust’ (2010) 40 HongKongLJ 787, 800–2Google Scholar.

170 Matthews (n 37) 316.

171 Hogg, JE, ‘Why Not Restate the English Law of Ownership of Land’ (1921) 30 YaleLJ 581Google Scholar.

172 Salmond (n 6) 220.

173 Harris, JW, ‘Reason or Mumbo Jumbo: The Common Law's Approach to Property’ (2002) Proceedings of the British Academy 445, 454–70Google ScholarPubMed.

174 Fox, D, ‘Relativity of Title at Law and in Equity’ (2006) 65 CLJ 330, 332Google Scholar (Fox goes on to say, ‘title is best understood as referring to a claim to an asset arising from a proprietary interest’ (333), but that usage of ‘title’ in a trust context would pit the trustee (with legal title) against the beneficiary (with equitable title) in a rivalrous relationship with respect to trust property, which does not adequately describe property that is the subject of trust administration nor the roles played by each of the beneficiary and trustee in active or open trusts—see eg McPhail v Doulton [1971] AC 424, 456–457 per Lord Reid, Viscount Dilhorne and Lord Wilberforce).

175 Sir Megarry, R, A Manual of the Law of Real Property (Oakley, AJ (ed), 8th edn, Sweet & Maxwell 2002)Google Scholar lxxix (cf ‘[a]bstract of title: an epitome of documents and facts showing ownership’ (lxxv, 158); ‘ownership’ is not defined; however, ‘beneficial owner: [is] a person entitled for his own benefit and not, e.g. as trustee’ (lxxv) (original emphasis)).

176 Re Flower and Metropolitan Board of Works (1884) 27 ChD 592, 596 per Kay J; Wyman v Paterson [1900] AC 271, 288 per Lord Davey; WF Fratcher, Scott on Trusts (4th edn, 1987) [175].

177 Browne v Butter (1857) 24 Beav 159, 161–162 per Romilly MR; Lewis v Nobbs (1878) 8 ChD 591; Webb v Jonas (1888) 39 ChD 660.

178 Honoré (n 15) 11.

179 Compare Emerich (n 124) 21.

180 cf Glenn (n 36) 431–2, 435–8.

181 eg Hayton, Kortmann and Verhagen (n 88) 38–9, 43. See also (n 148) and accompanying text.

182 Hayton, Kortmann and Verhagen (n 88) 13. cf Smits (n 33) 264.

183 Smith (n 169) 788; Waters (n 115) 449; Waters (n 48) 864. See also Fox, D, ‘Non-Excludable Trustee Duties’ (2011) 17 Trusts & Trustees 17, 18Google Scholar.

184 Compare Hayton, D, ‘When is a Trust not a Trust?’ (1992) 1 JITCP 3Google Scholar; Brownbill, D, ‘When Is a Sham Not a Sham?’ (1993) 2 JITCP 13Google Scholar.

185 Hague Trusts Convention (n 125) arts 1, 2; Overbeck (n 128) 376–9. cf Convention on the Law Applicable to Agency, art 1, art 3(b); IGF Karsten, Explanatory Report on the Hague Agency Convention (Hague Conference 1978) 414–15. The Hague Trusts Convention (with 12 signatories) is relatively successful, compared with the Hague Agency Convention (with only four signatories from civilian jurisdictions—ie Argentina, France, the Netherlands and Portugal), which suggests a general unwillingness of States, especially in the common law tradition, to recognize and enforce agency relationships internationally. That same reticence is not present in the case of trusts, though.

186 Lupoi, M, ‘The Shapeless Trust’ (1995) 1 Trusts & Trustees 15Google Scholar.

187 cf McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623, 629 per Young J; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, 519.

188 eg Maitland (n 168) 272–3.

189 cf Rudden, B, ‘Things as Thing and Things as Wealth’ (1994) 14 OJLS 81Google Scholar, 82, 86; Smith (n 110) 333.

190 See eg McPhail v Doulton [1971] AC 424, 456–457 per Lord Reid, Viscount Dilhorne and Lord Wilberforce and above n 174.

191 Glenn v FCT (1915) 20 CLR 490, 497.

192 cf R Tunnicliffe, Offshore Trusts: Tax Rules & Trust Concepts (CCH 2003) 6.

193 FW Maitland, Equity and the Forms of Action (CUP 1910) 17 (original emphasis).

194 Senior Court Act 1981, section 49; Judicature Act 1873, section 25; Maitland (n 193) 17–18.

195 B Rudden (n 189) 89.

196 Stock Exchange (Completion of Bargains) Act 1976, section 5, as amended by Financial Services Act 1986, section 194(1); Trustees Act 2000, Part IV.

197 See Heydon, JD and Leeming, MJ (eds), Jacob's Law of Trusts in Australia (7th edn, Butterworths 2006) 49–50Google Scholar.

198 cf Honoré (n 61) 7; The Law Commission and the Scottish Law Commission, Trustees' Powers and Duties (Law Com, No 260; Scot Law Com, No 172) 61, n 3.

199 Gretton (n 51) 604.

200 cf Schmidt, TS, Trusts and Trust-like Devices (British Institute of International and Comparative Law, 1981)Google Scholar.

201 cf Harris (n 173) 454–70; Honoré, AM, ‘Ownership’ in Guest, AG (ed), Oxford Essays in Jurisprudence (OUP 1961) 107Google Scholar (‘Ownership is one of the characteristic institutions in human society.’); Honoré (n 13) 163 (‘Ownership is one of the key institutions of human society. It is also, in Western culture, the most important legal conception.’).

202 Waters (n 115) 432, 449.

203 cf Harris, JW, ‘Trust, Power and Duty’ (1971) 87 LQR 31, 48Google Scholar.

204 cf Sacco, R, ‘Diversity and Uniformity in the Law’ (2001) AmJCompL 171, 181Google Scholar, 182. On fiduciary loyalty, see generally Finn, PD, Fiduciary Obligations (Thomson Lawbook 1977)Google Scholar; Conaglen, M, Fiduciary Loyalty (Hart Publishing 2010)Google Scholar.

205 See eg Waters, Gillen and Smith (n 8) 16.

206 cf Hayton, Kortmann and Verhagen (n 88) 4; Honoré (n 61) 4.

207 Glenn (n 36) 155–60.

208 Vranken, M, Fundamentals of European Civil Law (2nd edn, Federation Press 2010) 41Google Scholar.

209 ibid 41–65; Adorno, TW, Negative Dialetics (EB Ashton trans, Routledge 1973) 19–24Google Scholar, 139–64, 174–7.

210 cf EN Lorenz, ‘Predictability: Does the Flap of a Butterfly's Wings in Brazil Set off a Tornado in Texas?’ (American Association for the Advancement of Science 1972); Lorenz, EN, ‘Atmospheric Predictability As Revealed by Naturally Occurring Analogues’ (1969) 26(4) Journal of the Atmospheric Sciences 623Google Scholar.

211 See Glenn (n 36) 16.

212 Lepaulle, ‘An Outsider's View Point of the Nature of Trusts’ (n 110) 52.